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Vat/service tax on service charge collected by restaurants

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Satish Nayak

Manager Accounts & Taxation

21 Points Posted on 09 July 2012

Dear Members,

One of our client has been operationg chain of Restaurants in across india and charging Service Charge on billing and same has been distribute to employees.

Kindly guide us liability under service tax and vat act on collection of service charge collected separately in billing.

Regards,

Satish Nayak

Replies (3)

Hetisha

Semi Qualified CA

29 Points Posted on 09 July 2012

SerTax paid On Service Charge Provided By Restaurant Shall Be Liability for the restaurant And Not Profit That Can be distributed Among Employees.

MJ Krishnamurthy

ACCT(Retd)

5757 Points Posted on 09 July 2012

Mr Satish Nayak,

There is no problem in collecting service charges seperately in bills and distributing it among employees.VAT is as such applicable on the full value of bill(including service charges) and ST also if it is an air conditioned restaurant(star hotels and others) ST is not applicable for ordinary restaurants.....MJK